AG wades into debate over rainy-day spending

Money spent from the rainy day fund will count toward the state spending cap unless it’s done through a constitutional amendment, Attorney General Greg Abbott said in a letter to House Appropriations Committee Chairman Jim Pitts.

It’s another twist in the debate over how to fund key state priorities, particularly putting $2 billion into long-neglected water infrastructure.

The Texas Senate has approved Senate Joint Resolution 1, a proposed constitutional amendment to take $5.7 billion from the rainy day fund for transportation, water and public education.

Taking money from the rainy day fund would require a two-thirds vote of lawmakers, and so would a constitutional amendment. A constitutional amendment further would require voter approval on a statewide ballot.

Senate Finance Committee Chairman Tommy Williams, R-The Woodlands, has said it’s important to allocate the money through a constitutional amendment so that the money would be dedicated within the treasury and subject to legislative oversight.

The move also would remove the money from the state spending cap, which is imposed on tax revenue not otherwise dedicated by the constitution.

The Texas House last week voted down an effort to pull money from the rainy day fund for water.

House leaders and Gov. Rick Perry have turned a cold shoulder to the idea of dedicating the money through the constitution, with Speaker Joe Straus suggesting it would be punting lawmakers’ responsibility to the voters.

Pitts said in an interview Wednesday that SJR 1 remains a vehicle for funding water, although he said he hasn’t seen the House warming to the idea. He said Senate Bill 1, the state budget, also is a vehicle.

“We don’t need a constitutional amendment to do water. We’ll need 100 votes to use the rainy day fund,” Pitts said.

Leaders in the House and Senate have said they don’t see legislative support for breaking the spending cap, even to fund state priorities.

Paying for water without breaking the spending cap or approving a constitutional amendment could mean cutting back proposed spending in other areas.

But Pitts said budget writers weren’t looking at cutting $2 billion for water out of general revenue allocated to other areas.

Abbott in his letter to Pitts said that since the rainy day fund — formally the Economic Stabilization Fund — was created, the Legislative Budget Board “has counted appropriatinos of ESF funds toward the constitutional spending limit.”

“Only a constitutional amendment approved by Texas voters can remove ESF funds from the spending limit calculations mandated” in the state constitution,” said Abbott’s letter, dated Wednesday.

Abbott noted that his letter is not a formal opinion but informal legal advice.